Unity on Carbon Taxes?

Unity on Carbon Taxes?

Yesterday’s New York Times “Week in Review” section featured two
unconnected but noteworthy essays that just might signal an opening for
Team Obama. The subject was carbon taxes.

First came columnist and green-economy advocate Thomas Friedman, whose regular column featured another in his regular calls
for policy measures that have the potential to simultaneously address
jobs, security, public health, U.S. competitiveness, and climate change
-- or, as he dubbed it, "win-win-win-win-win." “I believe the second
biggest decision Barack Obama has to make — the first is deciding the
size of the stimulus — is whether to increase the federal gasoline tax
or impose an economy-wide carbon tax,” he wrote, adding: “Obama is
coming in with enormous popularity. This is his best window of
opportunity to impose a gas tax. And he could make it painless: offset
the gas tax by lowering payroll taxes, or phase it in over two years at
10 cents a month.”

Friedman went on:

There has to be a system that permanently changes consumer
demand, which would permanently change what Detroit makes, which would
attract more investment in battery technology to make electric cars,
which would hugely help the expansion of the wind and solar industries
— where the biggest drawback is the lack of batteries to store
electrons when the wind isn’t blowing or the sun isn’t shining. A
higher gas tax would drive all these systemic benefit.

That column wasn’t unexpected; Friedman has been on a similar crusade
for months. What was unexpected could be found on the following page,
part of a package the Times ran with advice to the incoming president on a variety of issues. “An Emissions Plan Conservatives Could Warm To”
was written by congressman Bob Inglis (Rep.-S.C.) and Arthur Laffer, a
member of Ronald Reagan’s Economic Policy Advisory Board and creator of
the Laffer Curve
-- the theory that lowering taxes increases tax revenue that has been
the basis for Republican economic policy the past quarter century.

Like Friedman, Inglis and Laffer argue for a carbon tax offset by an
equal reduction in income taxes or payroll taxes. “We need to impose a
tax on the thing we want less of (carbon dioxide) and reduce taxes on
the things we want more of (income and jobs),” they write. “A carbon
tax would attach the national security and environmental costs to
carbon-based fuels like oil, causing the market to recognize the price
of these negative externalities.”

The concept of carbon taxes offset by other tax reductions isn’t new. Al Gore proposed the idea
more than two years ago. But if this is truly an idea that
“conservatives could warm to,” and that Al Gore has blessed, it is well
worth exploring.